Strategic Analysis of Peninsula Hot Springs: A Case Study

This case study analyzes Peninsula Hot Springs, a leading hot spring and day spa in Australia. It examines the company's current strategic approach, emphasizing its expansion strategy and resource-based view, particularly its unique geothermal water. The analysis includes a PESTLEDI analysis of the external environment and applies Porter's Five Forces model to assess the competitive landscape. The case study highlights the company's differentiation strategy and its fit within the context of the Resource-Based View. Finally, it offers recommendations for enhancing core competencies and maintaining a competitive edge through innovation and customer-focused strategies. The analysis concludes that Peninsula Hot Springs has a strong competitive strategy and is well-positioned in its market.

Case Study
Analysis

Table of Contents
INTRODUCTION...........................................................................................................................1
Current Strategic Approach ...................................................................................................1
Situational Analysis................................................................................................................3
Porters Five Force...................................................................................................................4
Discussion – Fit between strategy and content.......................................................................5
Recommendations .................................................................................................................5
CONCLUSION ...............................................................................................................................6
REFRENCES ..................................................................................................................................7

INTRODUCTION
Strategy could be described as an organization's high level plan for attaining its pre
determined specific goals, vision, mission along with enhancing its financial performance. For an
enterprise a efficient business strategy holds a key to attain business growth, brand valuation and
strong competitive edge (Aithal, P. S. (2016). It is critically important for an organization to
formulate strong and efficient strategy as it aid firm to monitors it internal as well as external
performance in relation to its rivals. The report is based in case study of Peninsula Hot spring
that is a hot spring and day spa founded in 1997 in Australia. The project will discuss about
current strategic approach of the company along with its generic strategies. Further a situational
analysis and Porters Five force model of the firm will be presented with a brief discussion about
fir between strategy and content.
Current Strategic Approach
Peninsula hot spring is one of the leading hots spring and day spa in Australia. The
company is attempting to gain more market share, attract more international tourists and visitors
is currently implementing expansion strategy. Implying this, firm has invested $10 million that
forms to be biggest expansion for a wellness destination till date (Peninsula Hot Springs unveils
13 million dollar expansion, 2018). Undertaking this strategy, firm is developing an open air
amphitheatre and stage areas for hosting various entertainment, arts and health sessions. This
business have formed various strategic partnerships with other mental, social and well-being
organisations to improve health outcomes of people.
Resource Based View
Resource based view is a managerial approach that helps in determining the resources
and potential capabilities of an enterprise to gain sustainable competitive advantage. Thus for
identify its resources that could assist in creating value added services for attracting more
customers this approach involves VRIO test. This test supports company to evaluate each of its
current resources on criteria like value it posses, rarity of it, expense and possibility to substitute
it and possibility of firm to exploit it (Delmas & Pekovic(2015)). Thus, those resources that have
all these characteristics could be used as source of gaining edge over rivals.
For Peninsula Hot Spring is a geothermal hot spring and day spa. By applying VRIO test
the most competitive resource that is having unique distinct feature is its water (Ruziwa, (2015).
The most unique and distinctive feature this geothermal spring is its water that comes directly
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from natural deep well that is 637 meters below ground and is classified to contain true minerals
like boron, magnesium and potassium. Each of these minerals are having true value for
improving and enhancing health. This is to serve as most attractive characteristic for attracting
people who besides getting relaxing experience can also enhance their health.
Generic Strategies
Porter's Generic Strategy forms an approach to ascertain competitive advantage of a firm.
It involves three strategies
 Cost Leadership: This strategy involves firm to be low cost producer in its market to
capture large market share and competitive edge over its leading rivals. These strategy
propagates firm to lower down its cost of production and to attain economies of scalable
so as to ultimately produce a quality product at affordable price.
(Source: Porter's Generic strategies, 2018)
 Differentiation: It involves developing a distinctive, most unique product that add value
to consumers experience that justifies it to charge premium price from customers.
 Focus Strategy: It concentrates on niche market and tries to attempt either cost leadership
or differentiation within it. It involves two variants i.e. cost focus that attempts to seek
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Illustration 1: Porter's Generic strategies

cost leadership in target niche market and differentiation that tries to cater the specific
needs and desires of customers belonging to target niche market (Kaya, (2015).
In context to Peninsula hot spring the best strategy to be adopted is differentiation. As
company is providing spa bathing and treatment centre that is just only relaxes customers but
also have many therapeutic benefits including reducing neuralgia,articular rheumatism, muscular
complaints and so on. With its 15 different bathing experiences for age groups, adventure garden
for kids and luxurious accommodation it forms idyllic destination for relaxation and rejuvenation
(Bush, (2017)).Also it is the Australasia's best mineral spring. Thus, with such unique, distinct
concept the most appropriate strategy to attract its target audience is differentiation.
Situational Analysis
The external environment of a company includes in depth PESTLE analysis that enables
it to identify probable threats and opportunities for its business and to formulate effective and
best future related strategies. Mentioned below is the PESTLEDI analysis of Peninsula Hot
Spring:
Political: As Peninsula Hot Spring is comes under Eco Tourism Australia and is counted
in Australasia's best mineral Spring the political environment is stable and positive for this
business. Even with Brexit, the Australian economy is nit to face serious implications. On
contrary Brexit has provided opportunities of maintaining good trade relationship among both
nation
Economic: As Peninsula Hot Spring is known to provide luxurious services for relaxing
and rejuvenation that is subject to premium price, thus situations of economic downturn or
inflation might negatively impact business (Burns & Dewhurst, (2016)). It is at time of
economic distress people are more concerned about fulfilling their basic necessities rather than
spending on luxury.
Social : The services provided by Peninsula Hot spring not only bring relaxation to
people but also have various therapeutic benefits that could aid people to live a healthy, life.
Also, it offers a natural pollution free environment for customers to rejuvenation with their
family and works upon approach of spiritual and religious connection.
Technology: Peninsula Hot Spring uses several advance technologies that in its Ice Cave
and Deep Freeze to artificial create temperature between 2- 10 degrees. This is used to providing
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cold and hot therapy. This is to provide opportunity for company to provide various skin and
body treatment therapies to its guests.
Environmental: Peninsula Hot Spring uses untouched geothermal water rich in mineral
content in its pools and spas that do not have negative impact on environment. However,since
business totally demands upon nature it does prone to any natural calamity or risk that can
impact it.
Legal : Peninsula Hot Spring being requires to abide by various pool fencing, safety and
need to get registered under spa register building surveyors. Also it is essential for business to
abide by all legislations incorporated by Australia government in Building Act, 2004 and
Swimming Pools Act 1987.
Demographic: As the business target audience involves customers from every age from
16- 60 years looking for spent vacations with family, friends or alone this environment is not to
significantly impact business.
International: Peninsula Hot Spring been Australasia's best hot spring Peninsula Hot
Spring is having immense opportunity to attract tourists and visitors from all over the world.
Porters Five Force
In regard to Peninsula Hot Springs mentioned below is the Porters Five Force Model:
Threat of new entrants: This business requires immense capital investment to establish
and to build infrastructure related to spa, swimming pool and luxurious accommodation. As
Peninsula Hot Spring is counted in worlds most luxurious and top hot springs threat of entrants
are low for Peninsula-hot-springs (Rothaerme (2015).
Bargaining power of suppliers: Since the main resources that is been used by business is
natural water the bargaining power of suppliers is low.
Bargaining power of buyers: The luxurious and therapeutic facilities that is been
provided by the Peninsula Hot Spring to its customers in beautiful natural environment provides
justification for its premium prices. Thus, for people who are looking for relaxation and
rejuvenation the Peninsula-hot-springs forms to be perfect place. Thus bargaining power of
buyers is low.
Threat of substitute: For Peninsula-hot-springs threat of substitute is low as it forms to
Australasia's best spring and eco tourism spot. Also it is offering a number of luxurious facilities
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like spa, private pools,separate kids adventure garden and various treatment and health
consultation services to its customers that all is not provided by its competitors (Jarzabkowski &
Kaplan, (2015)).
Rivalry among existing competitors : Although Peninsula Hot Spring is one of the
leading geothermal spring offering spa and other services however there are other competitors
like Hepburn Spring etc. who to are providing good facilities for customers. Thus rivalry among
existing competitors is moderate.
Discussion – Fit between strategy and content
Peninsula Hot Spring is effectively utilizing its resources that is providing distinct
competitive advantage. As company has chosen differentiation strategy, that support business in
providing distinct market position by offering variety of luxurious services at premium prices. In
context to macro environment the current strategy enforced by business is good. From
PESTLEDI analysis it is ascertain that in comparison to threats business is having more
opportunities such as attracting international customers (Salavou, (2015)). From Porters five
force model it is concluded that industry profitability is quiet high as power of sum up forces are
low.
Recommendations
On basis of discussion about fit between strategy and content it is recommended for Peninsula
hot springs.
 With view to enhance its core competencies regarding its business competitors by
introducing new and innovative services for its customers. This also involves increasing
focus in its differentiation strategy by regularly analysing the change in taste and
preferences of its target audience.
 Also, in order to maintain its edge it is of vital importance for firm to explore new
innovative technologies introduced in market and to apply them to increase effectiveness
of its activities, marketing, customer services etc. For instance, firm could adopt e-
commerce,online reservation and payment system that will add on to customers convince.
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CONCLUSION
The project undertaken concludes that Peninsula-hot-springs is having one of the most
competitive strategy. Its unique concept of spa and various luxurious services helps in gaining a
distinct edge. Its differentiation strategy is perfect fir with its RBV analysis. Further porters five
force model indicates that the impact of all forces are low on business of Peninsula-hot-springs.
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REFRENCES
Book and Journals
Aithal, P. S. (2016). Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems.
Ruziwa, M. (2015). PESTLE analysis vital for strategic decision making. COMTEX News
Network, Inc. Africa News Service.
Bush, T. (2017). PESTLE analysis: everything you need to know (2016). Available in:
http://pestleanalysis. com.
Burns, P., & Dewhurst, J. (Eds.). (2016). Small business and entrepreneurship. Macmillan
International Higher Education.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Jarzabkowski, P., & Kaplan, S. (2015). Strategy tools‐in‐use: A framework for understanding
“technologies of rationality” in practice. Strategic Management Journal. 36(4). 537-558.
Salavou, H. E. (2015). Competitive strategies and their shift to the future. European Business
Review. 27(1). 80-99.
Kaya, N. (2015). Corporate entrepreneurship, generic competitive strategies, and firm
performance in small and medium-sized enterprises. Procedia-Social and Behavioral
Sciences. 207. 662-668.
Delmas, M. A., & Pekovic, S. (2015). Resource efficiency strategies and market conditions.
Long Range Planning. 48(2). 80-94.
Online
Peninsula Hot Springs unveils 13 million dollar expansion. 2018. [Online]. Available through:
<http://www.visitmorningtonpeninsula.org/PlanYourTrip/Blog/TabId/365/ArtMID/
944/ArticleID/343/Peninsula-Hot-Springs-unveils-13-million-dollar-expansion.aspx>.
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